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Comment - Increase revenues by 'saving the sale'
In a bid to encourage consumers to continue spending in-store during the recession, many retailers have increased promotions.
By David Hogg
However, this solution is almost causing as many problems as it is solving. Whilst certain stock might be selling faster, it also means that they become ‘out-of-stock’ more frequently.
Customers who travel to a store for a particular sale item, only to find it is not available, are likely to walk away disappointed and empty-handed, straight into a competitor’s store.
In my retail experience, customers leave without the item they came for at least 25 percent of the time. In these tighter economic times, it is more important than ever that retailers focus on maximising all revenue opportunities, whilst keeping the customer as happy as possible. However, these lost sales are becoming the death of retailers and the situation seems to be getting worse.
The consumer wants a great experience regardless of whether they chose shopping in the store, online or through any other channel. The convenience and the content provided by the internet affect the way customers shop. But, I would argue that a critical tipping point as to how customers shop is based on visibility. Is the sale product still available, can I reserve it online, and will it be there when I arrive in the store?
This ‘click and collect’ process is the result of the store and internet communicating to reserve the product: a process which has changed the game. Recent Ipsos MORI research commissioned by Sterling Commerce has revealed that 85% of consumers wish to research products online before purchasing in-store across key European markets .
Processes and tools can be in place in store to provide this same visibility and inventory promise, enabling the store assistant to take the lead on satisfying the customer. As a first step, a kiosk or POS register can provide visibility into the store backroom, other stores or warehouses and in-transit, or on-order inventory. Now the sales assistant has the first piece of the puzzle. With the inventory located, the sale can be completed through the following process:
• The inventory is located within the store and store consummates the transaction
• The sales assistant volunteers to ship the merchandise to the customer’s home at no cost and the store completes the sale
• Alternatively, the sales assistant reserves inventory from another store or warehouse and the customer can pick it up at their convenience and the store places the order
An average of 81 percent of European consumers have said it is useful or even vital to be able to order products that are out of stock and have them delivered to their home or local store. Imagine sales assistants responding with “I can take your order”, even on an item which is registered as sold-out in all the stores near-by. The customer is back in control of their shopping experience. Their transaction is completed and the store reduces lost revenue while making the customer happy.
Of course, multiple sources of demand and limited sources of supply often lead to a lost sale. Inventory may have sold out or is no longer available. The dreaded “on back-order” or “sold out” message can lose a customer and destroy customer loyalty all too easily. This unfortunate event will increase in frequency as inventory levels are tightened due to credit restrictions.
Now is the time to get back to the basics. Another strategy to save the sale is possible when inventory is no longer available. This solution is a variation of an old and forgotten tool – substitutions, which can be offered through an automated process. Customers want the product that they feel is best for them, but a substitution for a like-item or a better item may resolve the conflict.
The process of offering substitutions is very similar and an extension to the ship-to-home offer mentioned above. The offer should be made at the check-out till with the assistant using an approved substitution list based on a catalogue. The customer could receive a product at the store or to their home. To take this a step further, a retailer could offer an extensive substitution list by utilising endless aisle, or expanded assortment that E-Commerce can facilitate, levaeaging “drop ship” suppliers.
The retailer could fulfill the substituted item directly from the supplier and expedite the process generating another satisfied customer. Although shipping the product to the customer or offering substitutions can be expensive, the alternative of a lost sale is even greater. Accountants may be able to estimate immediate lost revenue caused by out of stocks but it is much harder to measure the longer term lost revenue of a dissatisfied customer who is less likely to return.
Satisfying the consumer when inventory is out-of-stock is achievable. Retailers have an opportunity to connect with their customers and prove that they come first regardless of the issue. By offering flexibility and options at critical touch points, retailers can continue to build customer loyalty, revenue and profits. The personal touch at a time of frustration is always welcomed. A simple question from the cashier or sales assistant to find a product will go a long way. Fulfilling the promise wins the customer over. Customers remember good service and will continue their brand loyalty based on the retailer’s execution. Is your organisation ready to satisfy a disgruntled customer?
David Hogg is Retail/CPG marketing manager at Sterling Commerce
Tagged as: stirling commerce | multichannel
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